Noodles & Company is proving that a smaller restaurant footprint can produce a healthier business.
After closing underperforming locations and overhauling its menu, the fast-casual chain is seeing customers return in greater numbers, restaurant profitability improve, and sales climb at its surviving locations. The momentum continued into October, when a new permanent ramen lineup helped sustain growth against difficult comparisons.
Systemwide same-store sales increased 9.5 percent in the third quarter, including a 10.7 percent jump at company-owned restaurants and 4.9 percent growth at franchised locations. Traffic at company restaurants rose 7.8 percent, marking the eighth consecutive quarter of positive comparable sales growth.
AUV climbed 15.2 percent to $1.54 million, and restaurant contribution margins improved 350 basis points to 16.7 percent. Adjusted EBITDA increased 34 percent to $8.7 million.
“This represents a step change in our operating model over the past year, as we benefited from the leverage of higher AUVs, together with more efficiencies on the cost side and the elimination of underperforming stores from our portfolio,” CEO Joe Christina said during the company’s Q3 earnings call.
READ MORE:
Noodles & Company Declares it’s ‘Back’ After Historic Sales Quarter
Noodles & Company’s Turnaround Strategy is Clicking
Noodles & Company Finds Momentum After Year of Reset
Restaurant closures have played a significant role in the turnaround. Noodles closed 12 company-owned restaurants and two franchised locations during the third quarter, offset by one franchise opening. The company expects to close 34 to 36 corporate restaurants and seven to eight franchised locations during 2026.
Those closures are helping nearby restaurants capture additional business. Noodles estimates that sales transferring from shuttered locations contributed approximately 3 percentage points to company same-store sales growth during the third quarter.
The company is nearing the end of its restaurant reduction program, with another 10 to 15 closures possible in 2027. Some would occur through natural lease expirations.
“It is winding down. We are getting to the end of the process. We do not have a firm number for you for 2027. Best thinking right now would be 10-15 closures next year,” CFO Mike Hynes said.
Menu innovation has provided another source of momentum. Noodles introduced Baked Cheese Tortelloni in August, building on customer demand for familiar comfort foods. The promotion also lifted interest in Baked Chicken Parm and Garlic Cream Tortelloni.
The company reported that first-time customers who ordered Baked Cheese Tortelloni returned at a higher rate than those who tried any other dish introduced this year.
Noodles followed that launch in October by making ramen a permanent menu category, expanding on the success of Chili Garlic Ramen, which debuted in 2025. The new lineup includes three dishes at different price points, giving customers additional choices without sacrificing average check.
Ramen accounted for a double-digit share of product mix during October, when comparable sales increased 5.5 percent despite an 8 percent gain in the same month last year.
The category will also serve as a recurring source of menu innovation. Noodles plans to rotate new ramen dishes throughout 2027, keeping the lineup fresh without treating the category as a temporary promotion.
“With ramen now a permanent part of our menu, we have established yet another platform for continued culinary innovation,” Christina said. “This gives us the opportunity to introduce new ramen dishes and rotate them into our menu sequentially to expand our appeal to different guests’ preferences and continue building excitement around our menu.”
The company is also preparing additional menu introductions in 2027, including the return of a customer favorite early in the year and new offerings across its Asian, Italian, and mac-and-cheese categories.
Operational improvements have supported the sales gains. Noodles has increased training, improved coordination among its culinary and restaurant teams, and reduced food waste. Food costs declined 90 basis points to 24.8 percent of sales, and labor costs fell 190 basis points to 29.5 percent.
Despite the improvement in restaurant performance, total revenue declined slightly to $120.9 million because of the smaller restaurant base. The company’s net loss narrowed to $2.1 million from $9.2 million a year earlier.
The chain now expects full-year revenue between $485 million and $495 million, same-store sales growth of 9 to 10 percent, and adjusted EBITDA between $35 million and $37 million. It also anticipates positive free cash flow and approximately $100 million in debt by year-end.
Although the company lowered the upper end of its previous revenue forecast, Hynes attributed the adjustment to closing restaurants earlier than initially planned, not weakening consumer demand.
“The biggest factor there, Todd, is the timing of our closures. Our total closures for the full year are within our original guidance range, but we did pull forward some, which is impacting the overall revenue line, but not hurting our profitability,” Hynes said.
